Correlation Between Bangyan Technology and Gansu Jiu

Can any of the company-specific risk be diversified away by investing in both Bangyan Technology and Gansu Jiu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bangyan Technology and Gansu Jiu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bangyan Technology Co and Gansu Jiu Steel, you can compare the effects of market volatilities on Bangyan Technology and Gansu Jiu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bangyan Technology with a short position of Gansu Jiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangyan Technology and Gansu Jiu.

Diversification Opportunities for Bangyan Technology and Gansu Jiu

0.38

Correlation Coefficient

Bangyan Technology  Gansu Jiu

Weak diversification

The 3 months correlation between Bangyan and Gansu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bangyan Technology Co and Gansu Jiu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Jiu Steel and Bangyan Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bangyan Technology Co are associated (or correlated) with Gansu Jiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Jiu Steel has no effect on the direction of Bangyan Technology i.e., Bangyan Technology and Gansu Jiu go up and down completely randomly.

Pair Corralation between Bangyan Technology and Gansu Jiu

Assuming the 90 days trading horizon Bangyan Technology Co is expected to generate 1.61 times more return on investment than Gansu Jiu. However, Bangyan Technology is 1.61 times more volatile than Gansu Jiu Steel. It trades about 0.13 of its potential returns per unit of risk. Gansu Jiu Steel is currently generating about -0.04 per unit of risk. If you would invest  1,681  in Bangyan Technology Co on December 2, 2024 and sell it today you would earn a total of  238.00  from holding Bangyan Technology Co or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bangyan Technology Co  vs.  Gansu Jiu Steel

Bangyan Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bangyan Technology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bangyan Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Gansu Jiu Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gansu Jiu Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bangyan Technology and Gansu Jiu

The main advantage of trading using opposite Bangyan Technology and Gansu Jiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangyan Technology position performs unexpectedly, Gansu Jiu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gansu Jiu will offset losses from the drop in Gansu Jiu's long position.

The idea behind Bangyan Technology Co and Gansu Jiu Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.